Any good caddy would recognize this as a trick question. Awell-known rule limits golfers to a maximum of 14 clubs in a bag,with a two-stroke-per-hole penalty for violations. Of course, ifyou're carrying a bag at Augusta, you probably don't miss this-youknow to count the clubs before leaving the clubhouse.

Insuring golf courses and country clubs likewise requires a“count”-of the numerous risks a country club faces and strategiesto manage them. By demonstrating this expertise and providingattentive service to our country-club clients, our agency hasdeveloped this niche into a significant portion of our book ofbusiness.

Designing our course

Our agency has been doing business on Hilton Head Island since1957, when development was just beginning to take off. We sell afairly even mix of personal and commercial lines, as well as asignificant book of employee benefits business. We have 42employees, including 28 agents, all of whom are licensed for bothpersonal and commercial lines.

We got our start by insuring businesses in the tourism andresort industry, which was at the heart of development. You won'tfind a lot of manufacturing businesses here. Our clients includecoastal properties, resorts, restaurants and plannedcommunities.

It didn't take long for developers to realize that top-notchgolf courses would be a huge attraction for the area. When the SeaPines Resort started building its courses in the late 1950s andearly 1960s, we got in on the “ground floor” of the industry. Todaywe insure several dozen country clubs, which account forapproximately 10% to 15% of our annual premium volume. In general,our producers don't specialize in just one niche-each is involvedin all types of business that we write. However, two producers andI are primarily responsible for working with our golf-courseclients.

Our market area runs from Brunswick, Ga., in the south, toMyrtle Beach, S.C., in the north. We write insurance for severaltypes of courses-public, private and semi-private. But the bulk ofour golf course business comes from private courses, thepredominant type of course in the area. Most of the courses we workwith are parts of planned residential communities. Many countryclubs in Hilton Head are distinct from those in other areas of thecountry. At most private clubs, prospective members must besponsored by a current member and admitted by a vote of allmembers. When a course is built as part of a planned community, asthey are here, membership in the country club usually isautomatically included with the purchase of a property in thedevelopment.

Addressing the ball

Earning business from country clubs requires having strong,long-standing relationships with key “players” involved with theclubs. Thus our marketing necessitates ongoing involvement in thecommunity, as well as a reputation for expertise.

Being involved in area organizations gives us entree to alltypes of business. Through participating in the local chamber ofcommerce, serving on the board of a hospital and supporting suchinstitutions as the local schools and the art league, we maintaincontact with valuable prospects and centers of influence, such asdevelopers and individuals who serve on the boards of countryclubs.

Our relationship with developers is especially important to oursuccess. Developers in the area are responsible for the lion'sshare of new projects. We've worked with all of them for manyyears, making it easier for us to stay on top of new projectsthey're considering and to talk to them about insuring thoseprojects.

Lining up the shot

Country club general managers speak to each other regularly.Occasionally one of our clients might suggest to another managerthat he call us about a coverage question. This might lead to newbusiness. A country club manager might also call to see if we canhelp reduce his premiums. With insurance representing one of themost significant costs for many clubs, many club directors feelthey have a fiduciary responsibility to make such an inquiry.

For the most part, however, we start insuring a development byworking with the developer, from the moment the first shovel ofdirt is turned over. We stay in touch with the developer throughoutthe project. Since we've been involved with the project from thestart, we don't have to qualify the development later on, when wemeet with the “end user” property owners.

As individual property owners acquire homes and move into acommunity, the developer will maintain control of the course untila certain percentage of the properties in the development are sold.The length and structure of this process varies by developer.During this time, there is often a transition phase, at which timea property owner's association is formed. This association willeventually own and manage the country club-and thus become ourprospect.

During the transition phase, we'll meet with a decision-makerfor the eventual property owners. This may be one individual whowill serve as the general manager of a course. Sometimes we maypresent to a finance committee or insurance committee of theproperty owners' association. At other times, it may be the generalmanager who reports to these groups after meeting with us.

By the time we make this presentation, it's easy for us to pointout exactly how we can handle the club's risks. The course mayalready be in use, so we're already providing its coverage. Thismakes it easy to make a strong case for ourselves. It also helpsthat the individuals we meet with-whether a manager or volunteermembers of a committee-are usually knowledgeable professionals whounderstand the importance of sound coverage.

Handicapping coverage

Our relationship with underwriters is just as important to oursuccess as our relationship with clients. We want underwriters tohave as much information as possible when we submit a client.Besides financial information about a club, we send photographs andmaps of the development. We include data on all buildingsassociated with a course, such as replacement-cost value and squarefootage. We send information about the automatic sprinklersystems-both in the club house (for safety) and on the golf course(for watering the course).

Our submission includes an equipment schedule, which in additionto golf carts usually includes tractors, trailers, lawn mowers,backhoes and other heavy equipment. We send information on anyemployees who may drive club-owned vehicles so the carrier canobtain MVRs for them. Carriers generally want information aboutsafety programs and loss-control measures in place. If the coursehas been operating before we come along, we include payrollinformation, receipts and three years of loss runs, includingworkers comp claims.

Underwriters use the receipts, loss history and property values,among other information, to rate a policy. In terms of premium,property values are really the engine that drives the price. Liquorreceipts from the country club also are important, as is staffpayroll.

Fore!

Property coverage starts with the course itself. In addition tothe tees, fairways and greens, covered property includes thesprinkler system, as well as items such as bulkheads and bridgesbuilt into the course. Covered buildings include the clubhouse,restaurant and “halfway houses.” Other property, such as heavylandscaping equipment, is covered on an inland marine schedule.Coverage for buildings is usually written on a replacement-costbasis. Covered equipment varies, and is often insured on an ACVbasis.

A typical property peril is vandalism; e.g., a teenager drivinghis car across a green. The windstorm coverage written into thepolicy is especially important to our clients, given our coastallocation. Because of the damage a storm can do to the trees on thecourse, we also include debris removal in the policy. The largest“uncovered” peril is the risk of flooding. We've looked at gettingflood insurance for courses in the past, but since we're on thecoast, the cost of the coverage is prohibitively high.

A major liability concern for courses is the possibility ofsomeone being injured on the course. We address this exposure witha $1 million general liability limit, then suggest an umbrellalimit beyond that. Our clients' tastes range between $5 million and$15 million. In the hard market, however, some clients havereviewed their umbrella limits, and realized they probably don'thave a $15 million exposure.

We also provide commercial auto insurance if a club usesvehicles in its operations. Pollution liability is anotherimportant part of our package. The groundskeepers who work thecourse and apply pesticides and herbicides must be licensedapplicators.

The amount of business income coverage we write varies accordingto how much revenue a club's restaurant and pro shop bring in. Thiscoverage also covers lost income resulting from damage to thecourse itself. With such coverage as BI and crime coverage, we'reagain fortunate that our country-club clients are educated andbusiness-savvy. We don't have to work hard to convince them thatthe protection is important.

Some coverages that are not part of our standard package arestill important to a country club, particularly D&O and workerscomp. Some courses employ armed guards, which not all our carrierswant to write. Our standard package often applies to special eventshosted at the club, such as weddings. We may add some coverage if,for instance, someone contracts with a valet service to park carsat the events.

Check your scorecard

We visit each client several times a year, including beforerenewal, to make sure any new equipment or operations are covered.Prior to the inception date, we explain any changes in coverage orprice. If a client's renewal date falls between June and November,we suggest they switch it to keep their premiums down. That'shurricane season, and underwriters tend to get a little jumpyduring those months.

Our expertise includes recognizing hazards that can be managedwithout insurance as well. For instance, I was playing a new courseon its first day of operation. The walking paths between the cartpath and the tee box were covered in pine straw, which is somewhatslick. This is especially hazardous in light of the currentmovement to require “soft spike” golf shoes. These shoes save wearand tear on the greens, but I felt in this situation that theycould also land a golfer on his back. I called the club the nextday and advised them of my concerns, and they promptly removed thestraw.

19th Hole

The managers and committee members we work with understand theneed for a sound risk-management program. They implement solidloss-control measures and realize their insurance policy is notintended to serve as a maintenance agreement. Since they understandthe complexity of providing adequate coverage, they appreciate ourexpertise even more, making long-term relationships morelikely.

When we satisfy country club clients, we often gain access to agreat list of personal-lines prospects. This is especially truewith planned residential communities, where the property values-andthe general insurance needs-are likely to be high. Indeed, themembers of these communities account for a substantial share of ourpersonal-lines business.

For a golfer, few things are sweeter than the feeling of hittingthe ball just right and watching it land inches from the hole. Forinsurance agents and brokers, adding to your book of business bymeeting the complex challenges of a country club client can bringyou that same feeling.

Bill Thomas is president of Carswell-Lighthouse InsuranceServices. He has been with the agency since 1976 and is a pastpresident of the Independent Insurance Agents and Brokers of SouthCarolina. Carswell has been in business on Hilton Head Island since1957 and merged with Lighthouse Financial Services in 1999. Readerscan contact Mr. Thomas at william.c. [email protected].